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9308 - Consignment Sales PDF

The document discusses key concepts around consignment sales under IFRS 15, including: 1) The consignor satisfies its performance obligation at a specific point in time, which is when the consigned goods are sold by the consignee to final consumers. 2) When goods are shipped for consignment, the consignee records a debit to Consignment Inventory and the consignor records no entry. 3) The document also provides two problems analyzing consignment sale transactions and calculating net income for the consignor.

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2K views2 pages

9308 - Consignment Sales PDF

The document discusses key concepts around consignment sales under IFRS 15, including: 1) The consignor satisfies its performance obligation at a specific point in time, which is when the consigned goods are sold by the consignee to final consumers. 2) When goods are shipped for consignment, the consignee records a debit to Consignment Inventory and the consignor records no entry. 3) The document also provides two problems analyzing consignment sale transactions and calculating net income for the consignor.

Uploaded by

Honey Mie Namit
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING GERMAN/LIM/VALIX/MARASIGAN


CONSIGNMENT SALES

Part I: Theory of Accounts

1. Under IFRS 15, what is the specific point in time when the consignor satisfies is performance
obligation under consignment contract?
a. Upon delivery of consigned goods by consignor to consignee
b. Upon remittance of cash by consignee to consignor
c. Upon sale of consigned goods by consignee to final consumers
d. Upon signing of contract of consignment by consignor and consignee

2. Under IFRS 15, how does a consignor satisfy its performance obligation under consignment contract?
a. Satisfaction over a period a period of time
b. Satisfaction at a specific point in time
c. Either A or B
d. Neither A nor B

3. When the consignor ships merchandise out for consignment to the consignee, in the books of the
consignee, it involves a
a. Debit to Consignment Inventory account
b. Debit to Merchandise Inventory account
c. Credit to Consignor Payable account
d. Memo entry

4. Which of the following is considered capitalizable or inventoriable cost?


a. Commission
b. Advertising
c. Freight from the consignor to consignee
d. Freight from the consignee to consignor

5. When the consignee pays expenses which is reimbursible on behalf of the consignor, in the books of
the consignor it involves a
a. Debit to Consignor Receivable account
b. Credit to Cash
c. Credit to Consignment Inventory account
d. Credit to Consignee Payable account

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Part II: Problem Solving

Problem 1

Consignor consigned 10 items to consignee and the items had a cost of P21,600 each. The freight from
consignor to consignee amounting to P14,400 was paid by the consignor. The sales price of each item was
P36,000. They also agreed that the consignee shall have a 15% commission based on the sales. The
following costs were paid by the consignee on behalf of the consignor: Selling expense P18,000; cartage
cost upon receipt of the consigned goods P1,800. At the end of the year, consignee sold 6 items to
customers.

1. What is the net income of the consignor at the end of the year?
a. 25,560
b. 58,680
c. 26,280
d. 55,800

2. What is the amount of the net remittance to the consignor?


a. 163,800
b. 196,200
c. 216,000
d. 164,700

Problem 2

Below is a consignment out account in the books of Entity A for the goods out on consignment to Entity
B:

CONSIGNMENT OUT - ENTITY B


Sept. 1 Shipped (10 items at cost) P3,500 Sept 30. Sales (7 items) P4,200
Freight-out P300

The following also were charges made by Entity


B:
Sept. 30 Delivery expenses P175
Commission (20%) 840

What is the net income of the consignor for the month of September?
a. 1,275.00
b. 525.00
c. 435.00
d. 577.50

END

9308

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